The average sale price for a home in the London and St. Thomas housing market surpassed $500,000 for the first time last month, officials with The London and St. Thomas Association of Realtors (LSTAR) said this week.
The organization says the average cost of a home in the region — which includes London, St. Thomas, Strathroy, and Middlesex and Elgin Counties — now stands at $501,584, an increase of 22 per cent compared to the same time last year.
Even more alarming, the increase is 55.7 per cent higher than that seen in August 2017, and 95.8 per cent higher than August 2015.
Low supply and high demand is largely to blame for the increase, says LSTAR president Blair Campbell, who adds he expected the half-million-dollar threshold to be passed six months from now.
“We have very low supply with just 1.1 month’s worth of inventory on the market,” Campbell said. According to LSTAR figures, houses in our region stay on the market for a median of 10 days, compared to 13 days last August. In August 2015, the median was 31 days.
Though steady price increases are being seen in other markets, LSTAR is going up at a faster pace than many others.
“We’re still considered very affordable compared to some, but we have, in the last year, leaped past the Niagara region,” Campbell said. The average cost of a home there last month was $482,600.
“It used to be more expensive on an average house price, and this year we’re almost $20,000 higher in value.”
Elsewhere, average sale prices last month stood at $890,400 in the Greater Toronto Area, $702,600 in Hamilton-Burlington, $603,471 in Kitchener-Waterloo, and $418,477 in Windsor-Essex.
In our region, St. Thomas itself has seen the largest jump in house prices, rising 31.3 per cent over last August to $455,786.
Middlesex County, which sits at the top of the list for most expensive average home price — $635,077 — saw the second-highest increase with 29.3 per cent.
London’s average increase was 22.4 per cent to $501,849, with south London in particular seeing an increase of 27.4 per cent to $522,999.
Elgin County saw an increase of 19.9 per cent ($462,551), while Strathroy was nine per cent ($506,479).
Even with the coronavirus pandemic throwing the economy into turmoil, home sales in the region have been significant over the summer.
According to LSTAR, July was the best July in terms of sales since it began tracking data in 1978, with 1,275 homes sold. August, meanwhile, was the second best August on record, with 931 homes sold.
“I think that’s really driven, this year, because we had a soft market in the spring for the number of transactions when COVID was first new. I think a lot of people put things on pause, and now they’ve had an opportunity to adapt to the new normal, and decided to transact in July and August,” Campbell said.
He added concerns over a second potential wave of coronavirus may also be driving the summer demand, as people who may have been looking to purchase further down the road choose to do so now rather than wait.
Campbell, a realtor himself, said he and other realtors have also seen a notable increase in the number of out of town buyers, including from the GTA.
“There is that demographic effect where you have people who are hitting retirement age, and I think we’re going to see that for quite a period of time as the demographics, the Baby Boomer generation, over the next 10 years, you’ll see a lot of retirees,” he said.
“If they’re in the GTA, it can be a very attractive retirement plan to sell the expensive home there and buy something that’s equivalent, (and) can still put a large amount away for your retirement fund… We’ve had that for the last three-and-a-half years and it’s going to continue for still some time.”
But it hasn’t all been older buyers, he notes.
“We have a younger demographic that looks at this and says, ‘I’m working from home, and my employers told me I could be working from home indefinitely,'” Campbell says.
“If they’re at that age where you’re considering having children and say, ‘I need more space, a detached home with a yard looks attractive to me.’ We’re seeing those buyers come to town as well.”
Although the news may be a positive one for those looking to sell, the rising prices will likely come as less-than-welcome news for those who have found themselves priced further and further out of the local housing market.
“Five to 10 years ago, in nice areas of London, very nice subdivisions, you could buy very large houses for extremely low prices. I don’t think that was ever sustainable. It was only a matter of time before the GTA, sort of, stretched its fingers down here and prices started to move,” said London realtor Stewart Blair, who appeared Wednesday on 980 CFPL’s The Afternoon Show with Jess Brady and described the three-year 55 per cent price jump as “startling.”
“It can be hard working with first-time homebuyers. There’s always a balance and, you know, there’s the wish list and then there’s what’s reality? And we have to find a balance in there. There are still some great neighbourhoods in London with very reasonably-priced houses and there’s always smaller condo alternatives to start.”
With the cost of buying a home in London and St. Thomas only expected to rise, Blair says he doesn’t see a market correction or price crash on the horizon.
“There’s far more qualified people than me to comment on that, but I don’t see that happening. London prices were artificially low for a long time. They’ve now caught up roughly with where they should be, that may continue for a while yet,” he said.
“With the pandemic, we have seen, outside of the people coming from the GTA or from out of town, we are seeing and meeting people who have been stuck in their home since March and are saying, ‘we actually need an office, now. We need more space. We want a pool.’ It’s opened people’s eyes up to the world of possibilities.”